Big Win for Biden: Congress Passes Historic Covid Relief Bill

Plus, why debate over the plan is far from over  [The Fisc](   By Yuval Rosenberg and Michael Rainey Congress Passes Historic Covid Relief Bill, Delivering a Big, Quick Win for Biden The House passed President Joe Biden’s massive $1.9 trillion America Rescue Plan on Wednesday, giving final approval to a sweeping package that provides emergency pandemic aid and also authorizes a wave of federal spending to dramatically, if temporarily, expand anti-poverty and health care programs. The 220-211 House vote was almost entirely along party lines, as Republicans remained unified in their opposition to the relief package, which they derided as wasteful and partisan. One Democrat, Rep. Jared Golden of Maine, voted against the bill. Democrats erupted in cheers after the package passed, and they touted the vote as a monumental victory for the country. "This is the most consequential legislation that any of us will ever be a party to," House Speaker Nancy Pelosi (D-CA) said. "Who knows what the future may bring, but nonetheless, on this day we celebrate." Democrats also painted Republican opposition as political, pointing out the Republicans had supported many of the same measures under the Trump administration. "There’s only one thing that’s changed since we passed those first five bills," said House Majority Leader Steny Hoyer (D-MD). "The need is there, the virus is still with us, the economy is struggle, but now we have a Democratic president." Biden said in a statement that he looks forward to signing the bill into law on Friday. "For weeks now, an overwhelming percentage of Americans – Democrats, Independents, and Republicans – have made it clear they support the American Rescue Plan. Today, with final passage in the House of Representatives, their voice has been heard," he said. What’s in the final bill: The package provides a third round of direct payments, with most Americans eligible to receive payments of up to $1,400. It also extends a $300 federal boost to weekly unemployment insurance payments and dramatically increases tax benefits for families with children. The bill also includes hundreds of billions of dollars in direct aid to state, local and tribal governments; money to help K-12 schools reopen; funding for Covid-19 vaccine distribution, testing and contact tracing; and increased subsidies for health care coverage. It also provides more aid for small businesses and housing assistance, and $86 billion to bail out union pensions You can find more details [here]( or [here](. In all, the latest bill includes $1.8 trillion in federal spending, according to a Congressional Budget Office [estimate]( and will add $.185 trillion to the deficit over the next decade. The Committee for a Responsible Federal Budget, a watchdog group focused on the national debt, says that the package could ultimately cost [$3.8 trillion]( or $4.1 trillion once interest costs are factored in, if temporary tax benefits and relief measures are extended or made permanent. Congress has now provided almost $6 trillion for fighting the pandemic and supporting the economy across six relief packages passed in just over a year’s time. The Vote May Be Over, but the Debate Is Not The relief package may be set to become law, but the debate over it is far from over. That’s true both in terms of the politics and the economics. On the political front, the massive rescue package is massively popular with the American public — it has higher approval than any recent major legislation. A new CNN poll finds that 61% of Americans support the relief bill, with 85% favoring the expanded tax credits, 77% approving of funds for school reopening and 76% saying the back the new round of direct payments. A new Morning Consult/Politico poll finds even higher approval for the overall package, with 75% of respondents saying they strongly or somewhat favor the package, including 90% of Democrats and 59% of Republicans. That could still change over time, though, so the Biden administration and Democrats will embark on a [longer-term effort]( to publicize the benefits of the bill — and Republicans will try to convince Americans of their view that the package was a liberal wish list that may do more harm than good. On the economic front, experts have already been debating whether the package is precisely what is needed to address the pandemic and lingering inequities or if it might overstimulate an economy already showing signs of recovery and poised to benefit from widespread vaccinations, leading to a surge in inflation or a buildup in debt that ultimately proves dangerous. As Politico’s Ben White [writes]( "It could be a Morning in America moment that further turbocharges an economy already primed to pop, reduces economic inequality and lofts Biden to the kind of economic hero status enjoyed by the likes of Franklin Delano Roosevelt after the Depression and Ronald Reagan in the boom-time 1980s. "Or it could be a fiery accelerant for global markets as gas prices surge, home prices jump, speculative assets soar and investors increasingly fear the kind of sharp inflation spike that can hit with remarkable speed if the government pours too much gasoline on an already warming economy." In a research note to clients on Wednesday, J.P. Morgan economist Michael Feroli noted that the addition of an estimated $1.85 trillion in debt over 10 years is enormous by any historical comparison." But, he added, he is less concerned that the package is too big for the economy to handle than some other economists, including [Larry Summers]( the former Treasury secretary under President Clinton and former director of the National Economic Council under President Obama, who has warned of a possible spike in inflation that could result in a damaging economic downturn. Feroli argues that the federal government won’t be spending the newly approved money all at once. The Congressional Budget Office estimates that the budget impact for fiscal year 2021 will be $1.16 trillion — and nearly $300 billion of that money set to go to state and local governments will take more time to be spent. On top of that, Americans are likely to save rather than spend much of the relief payments they get. Other economists have also suggested that inflation and debt shouldn’t be immediate concerns: "Our debt is clearly on a totally unsustainable path and we simply don’t know that rates are going to stay this low forever," Len Burman, a Syracuse University economist and co-founder of the Tax Policy Center, told Politico. "If markets got the idea that the U.S. was no longer that safe of a haven, rates could go up very quickly. That is not a ‘right now’ problem. And it makes sense to invest in smart things right now. But it can become a problem." As the trillions in relief and stimulus spending work their way through the economy, the debate is unlikely to end for quite some time. How the Biden Relief Bill Could Cut Poverty by a Third The $1.9 trillion American Rescue Plan Act could cut poverty by more than a third in 2021, according to a [new analysis]( from researchers at the Urban Institute. Without the Covid relief bill, about 44 million would be living in poverty in the U.S. this year, the researchers estimated. But the legislation will result in 16 million of those being pulled above the poverty line, reducing the poverty rate from 13.7% to 8.7%. For children, the numbers are even more pronounced, with the poverty rate falling by half in the wake of the relief bill. The spending package is also projected to have a powerful effect on Black and Hispanic populations. "Poverty would fall 42 percent for Black, non-Hispanic people and 39 percent for Hispanic people compared with 34 percent for white, non-Hispanic people, thus reducing the disparities in poverty rates for Black, non-Hispanic people and Hispanic people relative to white, non-Hispanic people," the report said. The Urban researchers said that four provisions within the relief bill produce the most significant poverty-reducing effects: Unemployment benefits: The bill extends the current $300 per week supplement to state unemployment benefits for another 25 weeks, expiring on September 6. This provision on its own is projected to reduce the poverty rate from 13.7% to 12.6%. Direct payments: The legislation includes direct federal payments of up to $1,400 per person for those who qualify, which includes most Americans. This provision has the largest single effect on poverty, dropping the poverty rate from 13.7% to 10.2%. Child tax credit: The bill makes several changes to the existing child tax credit, making it fully refundable while increasing its value to $3,600 for children under the age of 6 and $3,000 for those between 6 and 17. This provision is projected to reduce the poverty rate by nearly a full percentage point. Food assistance: The bill includes a three-month extension of enhanced benefits through the Supplemental Nutrition Assistance Program, also known as SNAP or food stamps. The extension is projected to reduce the poverty rate by a tenth of a percentage point. All of this poverty-reducing spending comes at a time of particularly pressing need, according to a [separate report]( Wednesday from the Center on Budget and Policy Priorities. Economic hardship was at high levels at the end of last month, CBPP said, especially for families with children. The most recent Census data, collected in the last two weeks of February, indicate that 14% of adults with children reported that they hadn’t had enough food in the last week, significantly higher than the 4% who reported the same at any point during 2019. And 41% of adults with children reported that they had had trouble covering household expenses such as rent and car payments over the last week. Chart of the Day: Exceptional Growth In most of the world, Covid-19 will weigh on economies throughout 2021, resulting in lower output than expected before the pandemic hit. However, according to the latest [outlook]( from the Organization for Economic Co-operation and Development, the United States is the exception to the rule: Fourth quarter GDP is expected to be higher than pre-pandemic estimates indicated, coming in 0.2% above the level that was projected at the end of 2019. "Vaccine rollout, although uneven, is gaining momentum and government stimulus, particularly in the United States, is likely to provide a major boost to economic activity," the OECD said. "World output is expected to reach pre-pandemic levels by mid-2021 but much will depend on the race between vaccines and emerging variants of the virus." ([h/t Jason Furman]( Biden Orders 100 Million More Doses of JNJ Vaccine President Biden on Wednesday directed the government to purchase another 100 million doses of the Johnson & Johnson Covid-19 vaccine. "There is light at the end of this dark tunnel of the past year, but we cannot let our guard down now or assume that victory is inevitable," Biden said, adding, "There’s real reason for hope, folks." Biden met Wednesday afternoon with the top executives of Johnson & Johnson and Merck, which is helping to manufacture the Johnson & Johnson vaccine under an agreement announced by the administration last week. The administration already said it had ordered enough vaccine doses to cover every American adult by the end of May, and the latest order, which likely won’t be ready for some time, is intended for longer-term use. "The White House's latest vaccine purchase is aimed at preparing for a range of longer-term scenarios, including the need to give people second ‘booster’ shots to guard against emerging Covid variants," Politico [reports](. Biden said Wednesday that if the U.S. has a surplus of vaccines it will share the additional doses with the rest of the world. "We’re not going to be ultimately safe until the world is safe. So we’re going to start off making sure Americans are taken care off first, but we’re then going to try to help the rest of the world." News - [Democrats’ Messaging Shifts as They Pass Biden Relief Bill: From Economic Crisis Rescue to Poverty Relief]( – Washington Post - [Biden Wants to Sell the Stimulus. The White House Is Still Figuring Out How.]( – Washington Post - [Biden Immediately Begins Selling Virus Aid Plan to Public]( – Associated Press - [Business Groups Issue Both Praise and Criticism on COVID Relief Bill's Passage]( – The Hill - [‘Hoping for a Flood’: How States Are Preparing for a Surge in Vaccine Supply]( – Washington Post - [F.A.Q. on Stimulus, Unemployment and Tax Rebates]( – New York Times - [Biden Got the Vaccine Rollout Humming, With Trump’s Help]( – New York Times - [U.S. Infrastructure Bill Could Pass Committee in May, Chair Says]( – Bloomberg - [Leahy: GOP Can Have Half the Earmarks in Spending Bills]( – Roll Call - [A $22,368 Bill That Dodged and Weaved to Find a Gap in America’s Health System]( – New York Times Views and Analysis - [How the $1.9 Trillion U.S. Stimulus Package Compares With Other Countries’ Coronavirus Spending]( – Adam Taylor, Washington Post - [How Biden Funds His Next Bill: Shrink the $7.5 Trillion Tax Gap]( – Chye-Ching Huang, New York Times - [Yes, the Covid Rescue Bill Is a ‘Liberal Wish List.’ What’s Wrong With That?]( – Paul Waldman, Washington Post - [Biden’s Plan Just Passed. Now Democrats Must Relentlessly Highlight What’s in It.]( – Greg Sargent, Washington Post - [How Stimulus Could Backfire Against Low-Wage Workers]( – Michael R. Strain, Bloomberg - [Biden Is Leading a Quiet Revolution]( – E.J. Dionne Jr., Washington Post - [Voters Are Leaving Republicans Behind]( – Helaine Olen, Washington Post - [Will Stagnation Follow the Biden Boom?](  – Paul Krugman, New York Times - [There Is a Generational Divide Among Republicans]( – Christopher Buskirk, New York Times - [A Tax Code Optimized for White Wealth Leaves Black Americans Behind]( – Ben Steverman, Bloomberg - [The Legacy of the Lost Year Will Be Devastating Inequality]( – Peter Coy, Bloomberg Copyright © 2020 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, [thefiscaltimes.com]( or through Facebook. The Fiscal Times, 399 Park Avenue, 14th Floor, New York, NY 10022, United States Want to change how you receive these emails? 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